Mitu Gulati

Lipstick on a Pig: Specific Performance on the Ground

Co-author(s)
Arnold, Theresa; Dixon, Amanda; Tanne, Hadar; Sherrill, Madison
PUBLISHER
Wisconsin Law Review
DATE
2021
 

Abstract

The black letter law says that money damages are the preferred remedy for contract breach under US law. Specific performance is reserved for extraordinary circumstances. Contract theory tells us that default rules generally reflect what a majority of contracting parties would agree to, had they considered the matter. But do contracting parties agree with the law’s preference for money damages over specific performance? In a data set of more than 1000 M&A contracts, we find that in over 80% of transactions, parties choose specific performance as their preferred remedy. Using interviews with senior M&A lawyers we seek to unpack the reasons why parties are contracting around the law’s distaste for specific performance and default rule of money damages.

Citation

Theresa Arnold et al., Lipstick on a Pig: Specific Performance on the Ground, Wisconsin Law Review (2021).
 

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